Summary:
Progress towards marriage equality within the U.S. has been extremely rapid in the last twenty years. In 2004, Massachusetts became the first state to legalize same-sex marriage (SSM). Following its example, more and more states introduced SSM until the final ruling in 2015 of the U.S. Supreme Court in Obergefell v. Hodges legalized SSM at ...

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Progress towards marriage equality within the U.S. has been extremely rapid in the last twenty years. In 2004, Massachusetts became the first state to legalize same-sex marriage (SSM). Following its example, more and more states introduced SSM until the final ruling in 2015 of the U.S. Supreme Court in Obergefell v. Hodges legalized SSM at the federal level. Were these amendments to marriage law a revolution with a profound impact for gays and lesbians? Or were they just a formal statement recognizing that times have changed, but without substantive consequences beyond more marriage (and divorce) licenses? On one hand, there are reasons to believe that the economic consequences of SSM legalization for LGBT individuals could be large. Similar past reforms - such as the passage of unilateral divorce laws – have substantially increased female labor force participation (Fernández et al., 2014). On the other hand, the effect could be small. LGBT activists have achieved several successes in the last twenty years, sustaining a steady, gradual improvement in attitudes towards homosexuality, that would now be reflected in the law.

The impact of SSM legalization on employment is also unclear ex-ante. Access to marriage may have led to increased commitment among partners (Badgett, 2009) and lower economic uncertainty, as well as shifts in taxation, health insurance benefits, and adoption laws. Following a standard Becker (1991) marriage model, these changes could have discouraged individuals in a same-sex relationships from both being employed at the same time.

Conversely, homophobic sentiments - although underreported - are still widespread (Coffman et al., 2017). Gays and lesbians commonly experience discrimination from employers, consumers and co-workers (Plug et al., 2004; Carpenter, 2007; Drydakis, 2009). Researchers have already documented improvements in attitudes and social norms following the recognition of same-sex relationships in the U.S. (Tankard et al., 2017) and in Europe (Aksoy et al., 2018). More generally, civil right legislations can affect social customs perceived by employers (Donohue et al., 1991). Therefore, it is possible that SSM legalization led to an increase in both the labor supply and demand for gays and lesbians since it drove a shift in social norms and a reduction in discrimination against sexual minorities.

Positive impact of same-sex marriage legalization on employment
In my job market paper, I exploit variation in the timing of SSM reforms across U.S. states to investigate whether SSM legalization led to improvements for gay and lesbian workers. Although there is a lack of large datasets containing information on labor market outcomes and sexual orientation, I can identify same-sex couples in the American Community Survey by matching household heads with their same-sex spouses or unmarried partners. I compare same-sex couples in states that introduced marriage equality with same-sex couples in states that had yet to legalize SSM between 2008 and 2016. Based on these comparisons, I conclude that individuals in gay and lesbian couples were more likely to be employed following the legalization of SSM. Using such a difference-in-difference approach, I estimated an increase of 2.4 percentage points in the probability of both partners being employed. This increase is comparable to the impact of the passage of unilateral divorce laws (Stevenson, 2007) or the introduction of the pill (Bailey, 2006). I find a similar increase in the individual probability of being employed for both the household head and her spouse or unmarried partner.

I do not observe any heterogeneity when examining male and female same-sex couples separately. I also obtain similar results when estimating a triple-difference model, i.e. when comparing opposite-sex and same-sex couples within the same state over time. Moreover, I find that the positive economic outcomes among same-sex couples were not at the expense of opposite-sex households, with employment levels for opposite-sex couples remaining stable before and after SSM legislation. I further extend the analysis to show that same-sex couples were more likely to work full-time and more hours per week following the legalization of SSM. Quite surprisingly, both gay and lesbian couples do not seem to be more prone to have children despite the extension of marriage, thus explaining the lack of increase in specialization among partners predicted by Becker. Finally, I replicate my analysis using data from the Survey of Income and Program Participation. As shown in the following figure, the estimates from this longitudinal study confirm my main findings.Robustness checks: endogeneity timing of the reform, anticipation and compositional changes
The positive impact of SSM legalization on employment is robust to restricting the analysis to the years in which SSM legalization was driven by decisions from the U.S. Supreme Court. This excludes the possibility that the results are due to state unobservable factors related to the timing of SSM legalization.
As clear from the above figure, I do not detect any pre-treatment effect: all estimates preceding the law changes are statistically indistinguishable from zero. These results support the parallel trend assumption and rule out the hypothesis that improvements in the labor market were actually driven by changes in attitudes among the general population before SSM legalization.

Finally, I do not find evidence of a surge in migration towards states that legalized SSM. This finding does not support the idea that working age same-sex couples simply fled to more tolerant states and got married, such that the improved economic outcomes are just a reflection of shifting geography.

Discrimination as the underlying mechanism
I provide compelling but still suggestive evidence supporting the hypothesis that SSM legalization led to lower discrimination in the labor market, thus increasing both the supply and demand of gay and lesbian workers.

The estimated increase in employment does not seem to be concentrated among married same-sex couples, but it extends to unmarried same-sex couples, singles, and “closeted” cohabitating individuals who hide their sexual preferences.

Employment increases occurred for same-sex couples following other legislation targeting the LGBT community, such as anti-discrimination laws and legalization of domestic partnerships, while employment among same-sex couples decreased in states that introduced bans on SSM.

There were substantial and long-lasting declines in Google searches for homophobic terms following the legalization of SSM.

Considerations for legalizing same-sex marriage in other countries
Analogous to the increase in female labor force participation witnessed in the past decades, legalizing SSM led to higher integration of same-sex couples in the workforce. An increase of 2% in the probability of being employed for 5% of the U.S. labor force (around 160 million, a rough estimate of the gay and lesbian population) may have resulted in 160,000 additional individuals employed.

SSM can thus stimulate economic growth and a more efficient allocation of human capital. This is particularly relevant for development economists. Many countries in Latin America have recently legalized SSM or are considering changing their marriage laws. At the same time, with the exception of South African and Taiwan, homosexuality is ostracized or barely tolerated in most countries in Africa and South-East Asia. India just abolished its 150-year-old colonial sodomy law. This paper suggests that such laws may affect labor market outcomes in these countries, and it provides an economic rationale to support marriage equality.

This study also suggests that the legal recognition of same-sex couples by U.S. institutions is more than just words, but a powerful act. Each legislative decision, culminating in the legalization of SSM across the country, has sent a signal to employers, co-workers, consumers, and LGBT members that social norms have changed and that discrimination would no longer be tolerated.

Dario Sansone is a Ph.D. Candidate in Economics at Georgetown University.